Welcome, Future Early Retirees.

2025 tax filing season is almost hear! While this can be daunting time for many, you would be surprised with the number of credits that are out there you may be eligible you didn’t even realize existed. I went out and found the ones which I hope you'll find useful this year.

In today’s newsletter:

• Share Money Bags 💰

• Tax Credits

• Things I found interesting

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Tax Credits

1. Education Tax Credits:

American Opportunity Tax Credit (AOTC)

Amount: Up to $2,500 per eligible student for the first four years of higher education. Details: This credit can cover 100% of the first $2,000 in qualified education expenses and 25% of the next $2,000. It's partially refundable, meaning you can receive up to $1,000 back even if you owe no tax. The credit phases out for single filers with a modified adjusted gross income (MAGI) between $80,000 to $90,000 and for joint filers between $160,000 to $180,000.

Lifetime Learning Credit (LLC)

Amount: Up to $2,000 per tax return for qualified tuition and related expenses. Details: This credit applies to undergraduate, graduate, and professional degree courses, including those aimed at acquiring or improving job skills. It's nonrefundable, meaning it can only reduce your tax liability to zero. The credit begins to phase out for single filers with MAGI over $80,000 and for joint filers over $160,000.

2. Child Tax Credit (CTC):

Amount: Up to $2,000 per qualifying child under 17, with $1,700 being refundable. Details: This credit is designed to help offset the cost of raising children. Its refundable portion, known as the Additional Child Tax Credit, can provide a refund even if you owe no tax. The credit starts to phase out at $200,000 for single filers or $400,000 for married couples filing jointly.

3. Earned Income Tax Credit (EITC):

Amount: Varies from $632 to $7,830 depending on the number of qualifying children, income, and filing status. Details: This credit is aimed at low to moderate-income workers, potentially providing a significant refund even if no taxes are owed. It's one of the most underutilized credits due to its complexity, but it can be a game-changer for eligible families.

4. Saver's Credit (Retirement Savings Contributions Credit):

Amount: From 10% to 50% of the first $2,000 contributed to a retirement account, depending on income. Details: This credit encourages low to middle-income individuals to save for retirement by making contributions to IRAs or employer-sponsored retirement plans. The percentage of the credit decreases as your income increases.

5. Premium Tax Credit:

Details: This credit helps with the cost of health insurance bought through the Health Insurance Marketplace. It's both advanceable, allowing you to lower your premium payments throughout the year, and refundable if you claim it when filing your taxes. Eligibility and credit amounts are based on your income and family size.

Strategic Tips for Filing:

Gather Documentation: Keep all your receipts and records for educational expenses, health insurance, and retirement contributions to substantiate your credits.

Check Your Eligibility: Use IRS tools or consult with a tax professional to ensure you meet all criteria for each credit.

File Electronically: E-filing can speed up your refund process, especially if you're claiming credits like the EITC or ACTC, which have specific refund release dates.

Remember, the landscape of tax credits can change with new legislation, so stay updated through the IRS website or reputable financial news sources. For those looking to make the most of their 2024 tax return, these credits could significantly lower your tax liability or increase your refund.

Happy filing!

Note: Always consult with a tax professional to ensure you're taking advantage of all the credits you're eligible for, as individual circumstances can affect credit eligibility.

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